Exclusively Strata: the way of the future

Working out of rural New South Wales, Exclusively Strata is a boutique firm focused upon strata and community management services.

The company is run by Michele Hemmings, a CPA with 30 years of experience, who prides herself on being a body corporate specialist, offering flexible meetings and the best contractors engaged and arranged quickly to work onsite. Ms Hemmings spoke recently with The Australian Business Executive about her path into strata management, and the unique challenges faced in the Aussie countryside.

Michele Hemmings

Exclusively Strata’s Michele Hemmings

After 18 years working in academia, Ms Hemmings decided to take some time away from her career, for family reasons. It was during the following year that she began to get interested in working in her current field, that of strata management.

“I fell into it by chance,” she explains, “and also by choice. I was on leave from an academic post at the time, a second maternity leave, and attended an AGM of a strata property that I owned with my husband.”

At the time, members of the strata had been getting increasingly disenchanted by the standard of management they were receiving, resulting in the decision for them to try and self-manage the buildings.

“So, I go to my first ever body corporate meeting and come home as Treasurer and Secretary. That was my first strata management experience, in October of the year of 2003. Over the Christmas I thought: this is quite good, I’m enjoying this.”

Being a stay-at-home parent meant Ms Hemmings was able to achieve flexibility in taking on this new role. She admits that having children was a big change in her world, and the opportunity to take on work during leave from academia was a welcome occurrence.

“I said to my husband, I think I might study and find out what’s actually involved in this role, because I am handling other people’s money and know the significance of the fiduciary duty that’s involved. I enrolled then in the appropriate course in 2004.”

The course was the TAFE NSW Certificate IV in Property Services. Ms Hemmings studied by correspondence, completing assignments and exams for 24 units, half of which she received in credits from her previous three Accounting degrees and CPA qualification.

“I then applied to Fair Trading NSW for a licence, and after police checks I was a licensed Strata Managing Agent. In 2005 I opened up to the world and said: here I am. I knocked on a few doors, and put an ad in the paper, and the phone didn’t stop ringing thereafter.”

This was the beginning of Exclusively Strata. Despite a slow first couple of months, accompanied by some nerves about whether the business would get off the ground, by the spring of that year things were already starting to pick up.

“Every month it just became word of mouth. Fortunately, in a city like Wagga Wagga, with a population of 65-75,000 people, it didn’t take much to get around. I also visited selling agents to let them know where I was, so it grew very quickly, exponentially almost.”

After an initial slow period Exclusively Strata grew very quickly

Getting Started

Ms Hemmings admits that Wagga Wagga was not exactly underserviced in terms of strata management before she started her company, but that the services being offered were not up to standard.

“There was a disappointment that people felt with the service provided to the city,” she explains. “We had a case of a monopoly, there were two providers for several years and then one bought out the other.”

With the increased scale of just one large strata management company in the area, residents began to feel that their needs were not being met on a personal level. “Jobs weren’t getting done, owners told me,” Ms Hemmings says.

“Meetings were hurried as they were only able to be held in normal business hours [of that company]. All of those things made me think: you’ve got to go to your client, not the other way around.”

Without the constraints of regular employment, Ms Hemmings was able and willing to provide the kind of personal service people in the city were looking for. This was a big part of the reason why the business took off so rapidly.

“I wasn’t constrained in any way by the 9-5 mentality,” she goes on to explain, “and I would have meetings in the evening, Saturday mornings, lunchtime—whatever suited the new client.”

Having a background in CPA and financial reporting was particularly helpful in pushing the business forward, as it allowed Ms Hemmings to educate strata owners in how their money was being spent and what they should be expecting in return.

“If you’re a savvy investor, you want to know that the finances are accounted for with high proprietary,” she says. “The fiduciary duty I hold is key to this post when you’re looking after somebody else’s money. So, I believe that is a strength that I have.”

In addition, Ms Hemmings makes sure to provide a friendly, reliable and flexible service, going out of her way to be available to clients even at times that might seem less convenient, something almost impossible to find at the bigger firms.

“I try to capitalise on that availability, the friendliness I provide. The preparedness to sit and talk and listen, rather than have a limited time. It’s all wrapped up in providing good quality service.”

Ms Hemmings stresses there are three main areas of the business that are vital to be familiar with. These are logistics, financial management and people management, three skills all strata managers must excel at in order to get ahead.

“Logistics means that you are responsible for getting a plumber when the downpipes are leaking on a unit, making sure that gardeners are doing a good job, and you have a regular handyman to deal with any repairs and maintenance to the buildings and common property.”

Coming from an academic background, where she mainly conversed with other academics and students, this was quite a new experience for Ms Hemming, and it took some while for her to get fully to grips with this new skill.

“Learning how those contractors operate and trying to get them to the jobs on time is a bit frustrating. If you’ve got a pergola that’s collapsing and you want someone to repair it and you have to wait for a builder to be available—that’s a difficulty.”

Excellent financial management means taking care of the funds paid by strata owners into the communal account of the strata, funds which are used to pay for maintenance, bills and everything else required to keep the building or buildings running smoothly.

“That fund management is critical, that you are keeping your reconciliations every month and you’re reporting to owners on a frequent basis, every six months. Making sure that everything is spot on with those finances is critical.”

The final important element is people management, something Ms Hemmings admits is absolutely vital to being a successful strata manager, and should be considered as the predominant skill to have.

It is important to be conscious of different personalities in the strata group, especially when it comes to meetings. Despite chairing many of her own meetings, some meetings are chaired by other people with particular characteristics.

“The person who usually puts their hand up to be Chair is quite the gregarious, dominating type of person. I have schemes where the Chair likes being the Chair and runs the Annual General Meeting with little input from the strata manager.”

In most other cases, the rural strata manager is expected to chair the meeting, as many of the owners do not know how or do not wantto do it. These meetings will generally be more relaxed and casual with Ms Hemmings at the helm, while still sticking to the agenda.

“Understanding those nuances in people, and if there’s any bitterness or carryings on between people, I won’t tolerate that. People management is understanding the way people interact with others, and making sure it’s all very civil and polite—and usually it is in rural strata schemes managed by Exclusively Strata.”

Ms Hemmings admits people management is an absolutely vital skill to being a successful strata manager

Growing a Client Base

Exclusively Strata now manages 38 schemes, averaging about 8-10 units in each. The largest has 39 villas or townhouses (a new scheme of 98 apartments in six buildings is currently under construction), and the smallest is a duplex of just two. The same standard of financial management is required no matter the size.

Despite the quick growth of the firm, it is by no means an easy task to pick up clients. Ms Hemmings admits that it takes quite a few events to get to the point where a strata group is prepared to make a change in management.

“You might have one or two people who are courageous enough to enquire as to another agency being in town, when they hear that there is,” she says, “they make that enquiry, by phone call usually.”

This would be normally followed by a meeting with a group executive or a subset of owners, a small number representative of those looking for change. In this meeting, Ms Hemmings puts forward what she is able to offer.

“It’s up to them to take my presentation and sell it on to the rest of the owners. Some owners may not even live there. It’s an advantage if they do, because they can just knock oneach other’s doors and say: shall we go and meet up with this potential new strata manager?”

This makes the process of finding new clients particularly challenging. In order for a contract to be changed, the new manager needs a majority of owners to agree to it at a General Meeting, meaning the benefits must be sold across the board.

“I can’t do anything more than have that initial meeting, and if they like me, they’ll go and spread the word. Unfortunately, they have to then approach the existing strata manager and say: could you give us the names and addresses of the other owners.”

Although this request may ring alarm bells for the current manager, the manager is compelled to release this information under the strata legislation. The next step is for a motion to be placed at the General Meeting.

“It could be a timing factor. It might be another 6-7 months, whatever it is. It also depends how urgently they want to change. If they were ready to change, they might seek to hold an Extraordinary General Meeting, and call one during the year rather than wait for the annual.”

Finally, the motion is put to the entire Owners Corporation. If a majority is reached in favour, then a change in management can be made. This formal process can take several weeks or months to complete.

The level of competition in Wagga Wagga means Ms Hemmings is particularly careful about offering the best service

Strata in the Country

The largest inland city in New South Wales, Wagga Wagga is a unique place to live, located under five hours South West of Sydney by car and the same distance from Melbourne, two and a half hours from Canberra and three from the NSW and Victorian snowfields.

The city is home to a significant proportion of transient home dwellers, with Army, Navy and Air Force members all represented, as well as a large cohort of Charles Sturt University students.

“It’s a very forward-growing city,” Ms Hemmings says, “and it’s been immune, in many ways, to the recessionary years since 2007. We are quite fortunate in that regard. Building is on a high and continues to be.”

The city has been so successful in growing and developing a host of top Australian sports personalities that it has become known as the ‘City of Good Sports’. It therefore has many sporting activities, teams and clubs, which have helped shape its culture.

“We have, I believe, somewhere in the vicinity of 300-400 strata schemes in the city. I spread to Tumut and Yass, two hours on the way to Sydney, and I’m looking at getting one at Leeton, a similar distance away in the other direction.”

These smaller towns outside of Wagga Wagga have fewer properties falling into the strata category, and most don’t tend to have professional managers overseeing the schemes. It is beneficial, therefore, for Exclusively Stratato spread further than city limits.

In rural areas such as Wagga Wagga, the growing strata industry still has several issues that Ms Hemmings admits must be rectified. The most important issue is the understanding of the strata industry itself.

“There is probably less knowledge about strata by the general population here than there would be in a major city,” she says, “as in, most people here have lived on a quarter acre block in a 3- or 4-bedroom home and moving to strata is quite foreign.”

“I would say the number one issue with country strata is the limited or lack of information or knowledge about strata or community living. That change of living is a shock to some people, they don’t necessarily understand it.”

In such a rural district, there are inevitably a lot of farms that are served. Farmers are retiring and moving into the city to apartments, and this can represent a big change in the type of living they are used to.

Much of this is to do with the level of architectural consistency expected across villas or units within strata complexes, where there is little opportunity to add to the surroundings with anything that isn’t in keeping with the other properties.

Ms Hemmings tells us how she once had to ask a lovely older woman to remove her gnomes from the front gardens of a community scheme, and the woman didn’t understand why they were not allowed.

“How I counter that [lack of knowledge] is to go round and visit the Real Estate offices and give them seminars. I also talk to solicitors, because even they don’t know all the strata management intricacies. I’m the one who’s specialised in that.”

With a recent change in NSW strata legislation, the next twelve months will be an important period for firms like Exclusively Strata to educate solicitors and agents on the changes.

Even more importantly, Ms Hemmings admits that meeting with owners and educating them about the strata law changes is a primary personal goal of hers. Once the teacher, always the teacher, they say.

The second significant issue of strata management in the country is the level of expectation on the shoulders of strata managers compared with those working out of large urban areas.

As a member of a board committee within Strata Community Australia NSW (SCA), Ms Hemmings regularly attends state meetings where this difference between rural and urban strata is very noticeable.

“The expectation of owners, I think, is higher on country strata managers than it is in the city. I get the feel that it’s extremely corporate, extremely time driven [in larger cities]. We in the country are much more relaxed, and free and open with our time.”

This may sound like a positive, but the mindset of the country strata owner assumes that small jobs should be done as part of the package. Ms Hemmings doesn’t add fees every time she is called out by a client to look at an issue. This is not the case in major cities, where jobs are billed in 15-minute blocks.

“The sense is that I can easily come around to visit and check everything out, or maybe spend two hours in a meeting instead of one to one and a half hours—owners don’t think twice about the time that it takes for managers to do these tasks.”

Ms Hemmings feels an element of responsibility in taking on day-to-day tasks herself, rather than outsourcing jobs and charging the client for extras. She admits to regularly thinking like a client, considering what will be best and cheapest for them.

“I’m probably my own worst enemy in that regard, knowing that the client wouldn’t like that. I have to change my thinking and perhaps be a little bit tougher with things, and I have begun to slowly invoice for extra meetings, because it’s in my agreement.”

The level of competition in Wagga Wagga means Ms Hemmings is particularly careful about offering the best financial service, as in the end she does not want to lose clients by appearing too willing to outsource and charge extra.

“Service is service is service,” Ms Hemmings goes on to explain. “So, if it does cost me an extra two hours in a day or a week, I will wear it, because I just want to keep my clients and keep them happy.”

The third issue of rural strata is the difficulty in getting staff. Ms Hemmings admits she is ready to expand her business, but that because the industry is not well-known, and still considered specialist, interested parties are hard to come by.

“It’s a very unique, specialised component of Real Estate. But it’s also an accounting exercise, it’s a logistics management exercise, it’s a people management exercise. Strata has a wide gamut of skills involved.”

In addition, there is a noticeable lack of academic intercourse in rural strata. Ms Hemmings admits she relishes the chance to go to Sydney for NSW SCA committee meetings or conferences to have academic discussions about issues facing the industry.

“Living and working in a rural city is the best lifestyle you can have. Strata management and strata living in general is a phenomenon that’s only been around for fifty years. It’s the way of the future, and I’m excited to be involved in an industry that’s so rapidly growing.”

With sales of apartments growing, exceeding those of houses over the last decade, strata has become a wonderfully exciting industry to be involved in. Ms Hemmings loves meeting all the people involved in the industry and seeing fresh perspectives.

“From a Professor from the University or a local doctor who owns a unit to live in or rent out, to the garbage collectors and cleaners—strata has the whole spectrum of demographics of the world. It’s just a wonderful industry. I really, really enjoy it.”

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